Anaheim Mayor Tom Tait produced a letter to the editor in Sunday’s Register. As the entire letter is newsworthy, we feel justified (after having given the Orange Lady a two-day head start) in reprinting the whole thing. It was entitled “Here we go again: Another Anaheim Tax Giveaway.”

By TOM TAIT / Contributing writer

In the coming weeks, the Anaheim city council is expected to vote on yet another tax subsidy of $144 million for a so-called “luxury” hotel right across the street from the entrance to Disneyland, and then another hotel subsidy later in the summer. I will be voting against these subsidies because I believe they are unnecessary, they put the city on a dangerous path financially and they are a reckless giveaway of taxpayer dollars.

Back in 2013, when the Anaheim city council majority voted to give $158 million to a politically-connected hotel developer at the Gardenwalk properties (I voted against this action), we were told we needed to help shield the developer from the effects of the economic recession, and that if we didn’t subsidize this hotel “it would not be built.” In the 3 years since then, we have approved and celebrated the opening of 17 hotels in Anaheim, all without any subsidies. Our hotels serve the millions of tourists who come to our resort area each year, with beautiful amenities, spas, dining and entertainment.

By all accounts, the hotel market is thriving. Hotel experts suggest it’s the strongest hotel market in 25 years: Record revenues and record profits, combined with today’s low interest rates and a booming tourism industry create ideal conditions for investors.

So why does the city see fit to give a handout to a luxury hotel developer, to the tune of $144 million? We certainly can’t argue that nothing will be built without a subsidy, as the last three years have shown. You will hear that Anaheim needs and even “deserves” a luxury hotel. I would argue that, in these market conditions, if it makes sense to build a luxury hotel, then someone will build it with their own money.

Normally, a city takes its hotel bed tax revenues and places them in the general fund to improve and increase city services to residents, like better parks programs, graffiti-removal services and more police officers. Instead, our city is about to take 70 percent of this hotel’s tax revenues and write a check to a hotel developer for over $7 million a year, for the next 20 years. (The remaining 20 percent goes to a bond payment owed to fund the Resort district improvements, and only 10 percent can be used for general fund purposes.)

These tax revenues rightfully belong to the people of Anaheim; instead, the city council is poised to give it to a hotelier that doesn’t need the incentive at all. The value of the proposed luxury hotel when it’s completed will far exceed the cost of construction, resulting in a large profit to the developer. So even if one agrees with the concept of subsidizing luxury hotels to help a project financially pencil, it doesn’t make sense in this instance. Any tax subsidy from the city only adds additional windfall profit to the developer… to the tune of $144 million.

This project makes ample profit without any subsidy. So, why would we do this? The answer is simple…we shouldn’t. The $144 million is desperately needed to pay for essential city services and to pay down pension obligations for our first responders and other employees who depend on these funds for their retirement security. If the council votes for another developer giveaway, then future leaders will be forced to reduce services and put pensions at risk.

The vast majority of businesses in Anaheim are not subsidized by the city. They thrive – or don’t – based on a variety of factors: The demand for their product or service, the location of their business, their own private investment and their hard work. The city plays a role in their success by properly providing paved streets and sidewalks, police and fire response and quality of life services like nearby parks.

Giving away taxpayer money to developers and their well paid lobbyists is called crony capitalism, and is bad public policy. Rather, the best way to build our city economy is to create a level playing field by keeping taxes fair and equal across the board, and using those tax revenues for the benefit of the residents and businesses who call Anaheim home.

Tom Tait is mayor of Anaheim

My view is that Mayor Tait is, if anything, being overly kind here about this psychotic waste of millions of dollars that Anaheim will desperately need in the future.

I don’t really blame the hotelier here. If you have a $75 million of expected profit on a new hotel — located right across from Disneyland, naturally — and then the City Council comes by and says “Hey, we’d like to give you another umpty-ump tens of millions of dollars just so that we’ll look ideologically consistent and won’t be seen as ‘picking winners and losers,'” your stockholders probably want you to take it. It’s the responsibility of the City Council and the City Manager, and maybe the city attorney as well, to make sure that nothing this absurd ever happens.

If Jordan Brandman and Lucille Kring support this insanity, they should be cut down this November at the ballot box — even if it were for this reason alone. As for the quarterback of giveaways, Kris Murray, she should never hold public office — or any other position of public authority — again. Anyone who wondered what the main issue in the election will be (aside from the travesty of the Council’s position made up on the spot by Jordan “Joffrey” Brandman regarding Short-Term Rentals) — you’ve found your answer. Does Anaheim want a Council that is THIS STUPID AND THIS DISRESPECTFUL OF FUTURE GENERATIONS OF ANAHEIMERS — or does it want politicians with good hearts and common sense.

Thanks as usual to Mayor Tait for bringing yet another travesty to public attention, while there is still time to prevent it – if the public gets upset enough at this kind of rip off. Is “NO MORE HUGE GIVEAWAYS” really THAT hard to understand?

We expect to have more of this story soon. Public comments will be boiling Tuesday night!

About Greg Diamond

Somewhat verbose worker's rights and government accountability attorney, residing in northwest Brea. General Counsel of CATER, the Coalition of Anaheim Taxpayers for Economic Responsibility, a non-partisan group of people sick of local corruption.
Deposed as Northern Vice Chair of DPOC in April 2014 when his anti-corruption and pro-consumer work in Anaheim infuriated the Building Trades and Teamsters in spring 2014, who then worked with the lawless and power-mad DPOC Chair to eliminate his internal oversight.
Occasionally runs for office to challenge some nasty incumbent who would otherwise run unopposed. (Someday he might pick a fight with the intent to win rather than just dent someone. You'll know it when you see it.) He got 45% of the vote against Bob Huff for State Senate in 2012 and in 2014 became the first attorney to challenge OCDA Tony Rackauckas since 2002.
None of his pre-putsch writings ever spoke for the Democratic Party at the local, county, state, national, or galactic level, nor do they now.
A family member co-owns a business offering campaign treasurer services to Democratic candidates and the odd independent. He is very proud of her. He doesn't directly profit from her work and it doesn't affect his coverage. (He does not always favor her clients, though she might hesitate to take one that he truly hated.)
He does advise some local campaigns informally and (so far) without compensation. (If that last bit changes, he will declare the interest.)

Well, they can’t raise taxes and they can’t spend money that they don’t have — and never will have, thanks to the Council majority. So I doubt that even a Council composed of six clones of Jose Moreno and the seventh as Mayor would really be a problem for you.

Be There Tonight!!
The Hotel ‘Give Away’has been pulled from tonight agenda..the Issue is NO!! TO ‘STR’S’ (Short Term Rentals) and as Always..the homeless issues ..in this the “tail of two cities”!!…the haves and the have nots…going about their business…and never to two shall meet…in this the city ofkindness..

This the perfect retort to those who claim bernie wants to give people free stuff. The truth is he just wants to , as all of us do, stop giving free stuff to the likes of the klepto-crats who bought the council members of the Anaheim city Council.

There is no getting around the fact that the extreme change in appearance is not attractive, and he looks a million years old. But we still don’t know the cause and guessing is not productive. If his health is bad, our gossip is mean. If this is his choice, those he trusts will set him straight, and our online discussion is still mean, as well as allowing him to play the victim, and claim he is being picked on by bullies. Keep the discussion to policy decisions which are the public’s business, goodness knows there is enough there to keep us busy for years.

While I don’t look forward to the next smash and grab gift of public funds, I am very interested in hearing the justification of Mr. Man of the People to explain why he would give $144mm to Chinese investors, without the feasibility gap requirement that had once claimed we subsidize only the projects that didn’t pencil out without the subsidy. How does he explain away a gift of public funds that has the highest impact to the working poor he claims to champion?

Same question to Lucille Kring, whose messaging has been consistent all along, that the subsidy is ONLY offered when the hotels could not otherwise be built. When Council approved the gift of public funds as now citywide policy in June 2015, staff failed to disclose in the meeting that the feasibility gap requirement had been eliminated, and since Lucille’s statements at the same meeting showed she also had missed a nuance of the Gardenwalk agreements until after they were a done deal, I hold out little hope that she fully understood the gap study is no longer done. Brought to you by the same leadership that repeatedly failed to read the agreements for the Wagner House Tennis Center while repeatingly pushing through expenditures vastly exceeding what was obligated.

Yes I am furious at “leaders” who can’t be bothered to read the actual documents and simply accept staff’s most ludicrous claims as gospel. But smacking them with that failure to provide basic fiduciary duty isn’t going to help us, what we need to do is figure out how to fix what is broken here.

While I hated the Gardenwalk’s increased subsidy, going far beyond the equitable split of revenues once offered the hotel deal, at least the deal offered some minimal benefit in goosing the dying shopping center. Of course once City Council kicked back sales tax to the shopping center much of THAT benefit died too, but I tried to see the connection of some good from it. But the next two hotel deals are just an unadorned gift of public funds, period. The Anaheim Plaza hotel and the Anabella are both owned by the same Chinese investor(s) which means the money taken from tourists and intended to offset the cost of offering services to over 20mm visitors per year (Disney only funds services on their own property) will instead be sent back to China, hoovered out of our local economy. That is 2/3rds of the incentive funding so far, and the 3 hotels together are expected to draw HALF a BILLION from our economy, boom, vaporized to another location. What Anaheim is left with is the burden of subsidizing the low wage labor to service the rooms, and 4 star rooms require heavier staff commitment, I have studies from the hospitality industry showing that. Taxpayers underwrite in some form every one of those jobs, whether through social services to make ends meet or the quality of life issues that force permit parking to offset doubling and tripling up in housing, the never ending yard sale, and the cars “for sale by owner” creating the de facto used car lot in public streets, all of it adds up, and to say we have to pay someone to invest in their own highly profitable property as though they are doing us some massive favor is insulting.

Unfit for public office. That is how we need to address those who vote in favor of this. Period. We are long, long past the excuses they once used to justify non-economists tinkering with the economy based on wishful thinking and campaign donations, and entirely lacking in actual economic data to support their artificial market.

Ryan Cantor

Posted May 18, 2016 at 12:33 PM

The feasibility gap analysis didn’t justify the first one (really, truely. It’s right there in black and white.)

Great point. Anaheim tax dollars for China!

Cynthia Ward

Posted May 19, 2016 at 1:02 AM

I just put in a CPRA request for any studies done to create the “Incentive” policy. Keeping in mind after YEARS of litigation we are back in court again tomorrow trying get the records of studies done for the Angels deal back in September 2013, so not holding my breath…

At a minimum not only should they have done a feasibility gap study (but instead pointed to the “policy” that removed it) we have not yet seen a MARKET STUDY to determine what specifically brings 4 star hotel patrons to So Cal, what amenities are they seeking and what makes them choose the hotels they stay at. The assumption that “if we build it they will come” has not yet been supported by any reliable market study and that alone smacks of lack of professionalism. a 4 star patron seeks more than simply fixtures and finishes in a nicer-than-the-neighbors guest room. A luxury market expects to find food upward from a Bubba Gump, they want shopping that does not involve Mickey t-shirts and keychains, and hey, where is Anaheim hiding our performing arts center? Can we draw that clientele or will those rooms go empty or be discounted to the 3 star rate for the clientele Anaheim does draw?

IF (big if) Anaheim appears ready to draw the 4 star client base from beach cities, City Staff should have done a study on Anaheim’s saturation point. Every hospitality market has a level the existing units can support, and a city that values their balance will wait for increased demand before approving equivalent additional units, otherwise everyone’s occupancy rates begin to drop and there is a domino effect that impacts other areas of the business. Occupancy has to remain at certain levels to make it viable to keep those amenities that are consistent with a 4 star experience, like on site restaurant, spa treatments, valet, concierge lounge, etc. You cannot cut those service levels and retain 4 star standing, and you cannot keep those amenities unless your occupancy sustains those services. Too many 4 star units dumped onto the market without assurance the market can absorb them is a disaster waiting to happen. All this time Anaheim has lacked enough 4 star patrons to drive even ONE non-Disney luxury flag, and suddenly we will have THREE. If we hit the saturation point, the surrounding units get cannibalized. In fact, subsidizing an iffy prospect is the fastest way to guarantee surrounding units will be cannibalized, because if the TOT is kicked back to the 4 star property, the guy who built 4 star rooms can AFFORD to offer them at 3 star rates to attract the patrons who ARE in Anaheim because the 4 star patrons keep heading for the beach cities looking for the experiences and community amenities Anaheim doesn’t offer.

Where is the regional employment study? Can our workforce support such expansion? Luxury rooms require a specialized skill set from maintenance of high end furnishings to the housekeeping staff as 4 star rooms can take one and a half to one and a quarter longer to clean, and require knowledge of different skills to clean specialty finishes, make perfect hospital corners on a deep-pocket mattress, deal with i-pad driven window treatments and lighting, and ensure all electronics are reset between guests etc. Does OC provide the trained staff to offer that higher level of service? How does the increase in housekeeping and other low wage labor interface with the already impacted housing issues in North OC?

Or will out of town/foreign hoteliers be importing their own people for the better paying key positions like managing and training Anaheim locals on the fine points of bed making for a luxury guest, and we are not really “creating jobs” so much as driving more of the same stuck in neutral career tracks? Has anyone studied that?

I will be very interested to see what kind of studies come back to show John Woodhead did his homework. Nobody expects him to understand the hospitality business, although it would be helpful since his job is driving economic development in a town where leaders have foolishly put all of our eggs in the tourism basket (with its thin bottom ready to drop out at the first sign of economic challenge) but we DO expect Woodhead to recognize that not only is hospitality a complex profession, the luxury market is its own special category, and since he clearly fails to understand it, he had better have experts coming in to guide him. What I fear is that once again we have politicians drafting economic policy they don’t understand, in an effort to prime the pump of an industry that does NOT provide nearly the benefits they claim, and doing it all with OUR money. If someone in the private sector pretended to have a skill set they don’t in fact possess, and used it to artificially tinker with financial decisions worth hundreds of millions of dollars, investors would have them thrown in jail. But around here we just call it “Council meeting Tuesday” and pretend it is OK. Shame on us for letting this happen without far more of a fight than we see at the meetings. This is YOUR MONEY, people, at what point are YOU going to speak up?!

People able to spend four or five hundred bucks a night at a hotel are not coming to Anaheim. They are going to stay at places along the coast – from Santa Monica to Dana Point. And Disneyland is not likely to be on their holiday itinerary.

I can very easily see rooms being discounted. Then what? Will the hotel developer still get his kickback?

P.S. I prefer using the word “kickback” rather than “subsidy” which seems to spark unnecessary debate from the kleptocrats about whether it is one. And kickback is sounds so sordid.

With the CMs typical decision process of emotion and anecdotal stories instead of data, analysis, and critique, Kring’s repeated argument recalls sports players who “need the quality of a 4- star accommodation, but not the discomfort of tourist’s kids” (my summary). Well how, pray tell, with the park attracting an over-capacity crowd Undeterred by REPEATED (and non-taxed) Ticket Price HIKES, will YET ANOTHER 4 star hotel be kept Tourist CHILD FREE for players?? I doubt the question has occurred to her, let alone an answer. And if there is one, why is its use BEYOND THE REACH of existing 4- Star hotels ? Magical thinking abounds.